Comptroller offers North Country economic forecast

State Comptroller Thomas DiNapoli addressed local business leaders in Plattsburgh on Oct. 20, 2017.

Photo by Pete DeMola

PLATTSBURGH | The unemployment rate in the North Country is higher than the state average.

Median household incomes are lower, and so is the labor participation rate. The population is shrinking. Job growth is largely frozen, and child poverty rates are higher.

But property taxes are lower, sales tax collection is robust and there are a number of promising economic development initiatives on the horizon.

State Comptroller Thomas DiNapoli visited Plattsburgh last Friday to deliver the results of the North Country’s economic profile, part of a series of regional breakouts being rolled out this year.

“We are a big state, and we are a diverse state,” he said.

BY THE NUMBERS

From 2010-16, the state’s population grew by 1.8 percent — but decreased in the North Country by 1.9 percent.

In August, the unemployment rate was 5.6 percent compared to a statewide average of 4.9 percent.

“Unemployment, relative to other regions in the state, is higher in the North Country,” said DiNapoli, calling it a “trend that is of some concern.”

Essex County has the highest median household income in the region at $52,758; St. Lawrence is lowest at $44,700. Clinton ranks $49,930.

Property owners in the six-county region pay lower property taxes than elsewhere in the state.

The estimated median tax bill in Clinton County was $3,858 in 2015, less than half of the statewide average of $8,173.

And housing is more affordable than elsewhere in the state.

“Just over 25 percent of homeowners in the North Country spent over 30 percent of their income on housing,” said DiNapoli, referring to the federal threshold for affordability.

Statewide, the number is 38 percent.

“That’s a plus in terms of your region’s standards,” DiNapoli said.

CONCERNS AND CHALLENGES

The comptroller flagged an aging workforce and high unemployment as leading concerns.

State unemployment numbers as a whole are rebounding, he said, but there’s significant variety between each of the 10 regions.

At 50 percent, labor participation in the North Country is the lowest of any of region.

“It suggests people have given up looking for jobs in certain cases,” DiNapoli. “And they just pull themselves out of the job market.”

While net total job growth numbers are steady for the state as a whole, most of these new jobs are created in the five boroughs of New York City. Once surrounding counties like Suffolk and Westchester are factored in, the number reaches 90 percent of all new jobs statewide.

Upstate job creation has stalled at .03 percent annually.

“We really do have a different picture when we get north of the downstate counties, so that’s when the dynamic in your region comes into play as well,” DiNapoli said.

Another challenge is matching workers with the new jobs emerging in manufacturing sector.

‘UNIQUE ASSETS’

Despite the challenges, the comptroller said the North Country has much to be optimistic about, including regional economic development council efforts, the $10 million Downtown Revitalization Initiative for the City of Plattsburgh and $125 million state investment into Norsk Titanium, which the governor touted in a visit just days before.

Efforts to reposition the region as transportation and aerospace cluster levering its proximity to Canada is an asset, he said. So are developments in alternative energy projects that aim to capitalize on the emerging green economy, he said.

“All of this is very, very exciting and creates great opportunities for the future,” he said.

“The North Country has many advantages and enviable assets to build upon: world-class natural resources, spectacular natural environment, an impressive higher education network — and that becomes so key to an economic future.”

Tourism is also a historical strength and classic growth area, he said.

STATEWIDE PICTURE

Zooming out, DiNapoli said while the state continues to recover from the Great Recession, there are some pending storm clouds.

While North Country sales tax collection receipts are robust — the first half of the year’s growth of 4.5 percent surpassed the statewide average of 3.3 percent — the state’s most recent monthly cash report revealed tax revenues are $387 million below projections.

“We’re falling short of the expectation when we’ve already lowered and reduced the initial projection,” DiNapoli said.

Much of the deficit is a result of reduction in personal income tax collection, a key revenue source for the state.

Changes in federal policy may also lead the state into choppy fiscal waters, including President Donald Trump’s executive order to stop making scheduled payments to insurance companies, part of his long-standing pledge to repeal “Obamacare.”

“If the more extreme proposals for repealing would take effect, you could conservatively say over the next few years we could lose something like $6 billion in federal money, largely from the Medicaid program,” DiNapoli said.

The state would then be forced to decide to make up for those funds and allow 2 million state residents to go uninsured.

The comptroller was also wary about how the president’s expansive tax reform plan would impact state finances.

The state and local tax deduction (SALT) permits taxpayers in New York to subtract payments to state and local governments from their federally taxable income.

In a procedural vote, the U.S. Senate on Thursday voted 52-47 to repeal the statute.

Without the SALT deduction, taxpayers would pay federal income taxes on the money they pay to state and local government — making it in effect, a form of double taxation, DiNapoli said.

“We don’t know the fine print yet,” DiNapoli said. “I just don’t trust this is going to come out in a way that will protect the hardworking people of New York.”

DiNapoli said any deficits at the federal level will trickle down to the state.

The loss of at $850 million in federal aid will allow the state budget director to pull the trigger on launching a contingency mechanism to make up for the shortfall.

It’s not the ideal scenario, said DiNapoli, and will likely be manifested at the local level in cutbacks in aid to local governments and school districts.

“We’re all going to come out as losers in that equation,” he said.

Despite the gloomy outlook, DiNapoli expressed optimism that the state could work with the federal government on shoring up outdated infrastructure, including $27 billion for the state’s local bridges alone.

“If Washington — starting with the president and members of Congress — are serious about dealing with infrastructure, I think that’d be a great opportunity for us to take advantage of a renewed partnership in this area with the federal government.”